Boeing Profit Declines 19% On Lower Sales

By REUTERS

Published: July 24, 2008

Boeing reported on Wednesday a bigger-than-expected 19 percent decline in quarterly profit as it took a charge on a delayed military plane contract and suffered the effects of its troubled 787 Dreamliner program.

The company, which is the world's biggest-selling plane maker and the Pentagon's No. 2 contractor, had lower sales at both its commercial and military operations, but held to its financial forecasts for this year and next, citing strong global demand for its products.

Boeing and its chief rival, Airbus, a unit of EADS, are hoping that high oil prices will spur demand for new fuel-efficient planes, but shares of both companies have suffered over the last few months as investors worry that prolonged increases in oil prices will drive more airlines into bankruptcy.

Boeing shares dropped 3.7 percent, to $66.72, on the New York Stock Exchange on Wednesday.

Boeing's chief executive, W. James McNerney Jr., acknowledged the company's order book was at risk from failing airlines, but said he was still confident it would hit delivery targets for this year and next.

''Clearly, economic conditions are tough for many of our commercial customers,'' Mr. McNerney said in a conference call with analysts. ''So far, we have experienced a minimal impact on backlog, with only a handful of deferrals by U.S. carriers. We have had no cancellations to speak of.''

Boeing does expect more deferrals and cancellations as a normal part of business, Mr. McNerney said, but added that the company was well positioned to deal with it.